It is a perfect word for the bulls this morning as a dovish European Central Bank and hopes for a dovish Fed keep the market running. In addition, the market is celebrating a tweet from President Trump which states, "Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan."
One of the big reasons the central banks have been more dovish lately is that there is a concern that a protracted trade war with China will damage the economy. If there is a potential deal then there is less likelihood that the Fed will need to cut rates three or more times as the market is anticipating.
Currently, the market is anticipating both progress on a deal with China and aggressive interest rate cuts. That isn't very logical but whoever said that the market was logical?
This is a good example of why it is paramount to focus on price action rather than macro arguments. It is very easy to question the euphoric action Tuesday morning but if you do you are being run over.
The likelihood of a Fed rate cut Wednesday has diminished due to Trump's tweet but that doesn't mean that the central bank won't maintain a dovish bias. Fight the Fed at your peril.
I have not done much new Tuesday morning. I'm letting strong stocks such as Smartsheet (SMAR) and Enphase Energy (ENPH) continue to run and am not finding a lot of new entries right now. Overall this is very good action in individual stocks and I'll be staying with the positive trend until it shifts.